May 6 (Bloomberg) -- Argentine wheat farmers, who reduced acreage for the past two seasons, may increase sowing areas as the government proposes reimbursing grain export taxes, said analysts from the three largest grain exchanges and the spokesman for Argentina’s largest wheat farming group.
Argentina, South America’s largest wheat producer, is poised to disclose today a proposal to reimburse as much as 23 percent export tax for the 2013-14 season, according to a grain exporting official, who asked not to be named as the plan will be announced by President Cristina Fernandez de Kirchner during a speech scheduled to start at 7 p.m. local time tonight. Argentine wheat exports slid to a record low after the country halted grain exports in December to ensure domestic supply.
“A few farmers may believe in this promise and may return to planting wheat,” Aldana Ferradas, analyst from Bahia Blanca Grain Exchange, said in a phone interview from the city 687 kilometers (426 miles) south of Buenos Aires. “The government announcement will arrive right on time to convince them as planting is expected to begin late this month and in June.”
Argentina’s barley, which isn’t taxable, soared to 1.2 million hectares (3 million acres) last season from 273,000 hectares in the 2005-2006 season, according to an April 8 report from the grains exchange in Bahia Blanca, known as the country’s wheat belt. Ferradas thinks a 10 percent increase in wheat acreage may be triggered by the reimbursement plan.
Wheat futures for July delivery fell 2.6 percent to $7.025 a bushel at 3:15 p.m. in Chicago, heading for the biggest decrease since April 15.
“The promised reimbursement may tempt a few farmers,” Raul Maestre, a spokesman for farmers association Aaprotrigo, said in a phone interview from Bolivar, Argentina. “A key element will be if the plan comes with a decree rather than just a verbal promise as the government is expected to lose $500 million in taxes.”
Argentina’s Trade Secretary Guillermo Moreno, who created the plan to boost wheat planting, didn’t reply to a phone call and an e-mail seeking comment.
President Fernandez and her predecessor and late husband Nestor Kirchner have been limiting exports of wheat and corn since 2006 to avoid local food shortages, a policy that has curbed wheat output. Argentina harvested 15.9 million tons of wheat in the 2010-2011 season, 14.5 million in 2011-2012 and 9.4 million in 2012-2013, according to figures published on the website of the Agricultural Ministry. Argentina’s planted area was reduced by 29 percent to 3.28 million hectares last season.
“Weather conditions to plant wheat are very good, soil humidity is perfect,” said Tomas Parenti, an analyst for the Rosario Grains Exchange, which covers the largest grain and oilseed Argentine port exporting area. “These conditions will indeed motivate more wheat planting.”
The Buenos Aires Grain Exchange today forecast an increase in the country’s planted wheat area of 8 percent to 3.9 million hectares compared with the prior season. The expected increase would be 7 percent less than the five-year average of 4.19 million and 20 percent less than the last decade’s average 4.9 million hectares.
“A few farmers are telling us they will come back to wheat as their last season experience with barley wasn’t that great,” said Esteban Copati, chief analyst at the grain exchange, the oldest one in the country.
Argentine farmers harvested 9.4 million tons of wheat in the 2012-2013 season, the Agricultural Ministry said Feb. 21, down 35 percent from the prior season’s 14.5 million tons. Argentina allowed 3.4 million to be exported as it wants to preserve a 6 million-ton quota for domestic consumption.
To contact the reporter on this story: Pablo Gonzalez in Buenos Aires at email@example.com
To contact the editor responsible for this story: James Attwood at firstname.lastname@example.org